After several months of investigation into the so-called robo-signing scandal, federal banking regulators have issued cease-and-desist orders to 14 of the nation's largest mortgage servicers. As a result, these firms — including Bank of America, JP Morgan Chase and Wells Fargo — will have to change the way they handle foreclosures.

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After several months of investigation into the so-called robo-signing scandal, federal banking regulators are taking action against the nation's largest mortgage servicers.

As a result, Bank of America, JPMorgan Chase and Wells Fargo, among others, will have to change the way they handle foreclosures. NPR's Tamara Keith has the story.

TAMARA KEITH: The issue of robo-signing blew up last fall, after several bank employees admitted they had signed thousands of foreclosure documents without verifying their accuracy.

Hundreds of thousands of foreclosures were put on hold and later resumed when banks said they didn't find any cases of foreclosures that shouldn't have happened. Still, state attorneys general from all 50 states launched an investigation, as did federal banking regulators.

Today, the regulators took enforcement action. John Walsh is the Acting Comptroller of the Currency.

JOHN WALSH: There were a series of problems that were identified, and taken together, those problems and deficiencies were serious enough for us to rate them as unsafe and unsound banking practices, which is a sort of a high threshold.

KEITH: The banking regulators issued orders requiring 14 major mortgage firms to change the way they deal with foreclosures. Among the changes, loan servicers will be required to give borrowers in trouble a single point of contact throughout the process. And Walsh says the orders will protect borrowers from foreclosure if the bank is modifying their loan to make it more affordable.

WALSH: If you are proceeding to make payments under a trial mod, or you're moving into a full-fledged modification, you're not going to come home from work and find a notice on the door. You're not going to open your mailbox and find notices saying, you know, foreclosure is continuing in parallel.

KEITH: The firms will be required to hire independent consultants to investigate their foreclosure practices over the past couple of years and could be forced to pay damages if borrowers were financially harmed.

In a statement, Wells Fargo said the enforcement actions send a strong message that, quote, "changes are needed." The bank described it as an unprecedented measure and a tough message to take.

JPMorgan Chase said complying will require very significant changes to its mortgage servicing business. But consumer advocates and others are not impressed. Adam Levitin is a law professor at Georgetown University.

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